Today on the Listing Agent Lifestyle podcast, we're talking with Kevin Kauffman from Phoenix, but not just from Phoenix. Kevin's team is spread all over, and as you'll hear, he's got a team of 40 people, all over the country, that have a pretty dynamic situation going on.
What you're going to hear in our conversation is the opportunity you have when you establish some, what we call proprietary metrics, some common numbers, and I'll go through this whole exercise with Kevin to calculate his Return on Relationship and Listing Multiplier Index.
When you look at what could happen as a team, where you establish this idea of becoming a Market Maker and set up systems so everyone can win, and everyone's working on improving their Return on Relationship and Listing Multiplier numbers, you can see an exponential effect it can have on the business.
This is a great example of how deep you can go with any of the Listing Agent Lifestyle Multipliers, even just focusing on relationships, and I think you're going to enjoy that in this episode.
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Transcript: Listing Agent Lifestyle Ep109
Dean: Kevin.
Kevin: Hey, Dean, how's it going?
Dean: I'm good, how are you?
Kevin: Doing good my man, doing good, I can't complain.
Dean: So where are you right now?
Kevin: I'm in beautiful Tempe, Arizona.
Dean: Okay, and is it Corona fever over there? What's going on?
Kevin: You know, it's starting to get that way, a little bit. Roads are definitely empty, got some schools closing. Well, in my office in Tempe, I closed my office and sent everybody home yesterday and, yeah, it's getting to be a little bit precaution time around here.
Dean: Wow, well, there you go. You start to see it's real. I mean, I do my Breakthrough Blueprint Events and I had one coming up in two weeks here or I guess, a little less than two weeks now and I had some international people coming from Belgium and Canada and, yeah, when they just shutdown all travel from Europe now and then it is getting real in terms of what's practically affecting people now.
Kevin: Yeah, no doubt about it. It's definitely real. I'm just hopeful if we take all these precautions now, then a month from now, we'll go, "Well, we overreacted." That's what I'm hoping for.
Dean: Better to have overreacted, that's true, isn't it? It's kind fun to be innovating and doing, I'm a do a virtual boardroom, where we're going to do it, going to go ahead and do the event, but we're going to do it online in a Zoom boardroom. That'll be fun. I think it's going to be a nice experiment.
Kevin: Yeah, I think one of the good things that's going to come out of this is that a lot of companies are going, "Okay, let's work from home," and they're going to find out that they can do that and that it's a viable option, truthfully. I think, I'm one of those guys, I want to go to the office every day, I really do, but I'm not a 'butt in seats' guy. I don't need to see your butt and I need to see your production, I need to see your output. That's what I need to see and I think there's going to be a lot of people realize, "Hey, you know what, we can do this and maybe this is a more viable option," especially for just kind of the way the world works today and the world that we live in and the technology that's actually available to us at this point.
We were kind of laughing, our real estate broker just built in the cloud. We don't have physical locations like the office I'm in.
Dean: Yeah, there's no Corona in the cloud. That's true.
Kevin: Yeah, exactly, yeah, and so just we had 40, 50 hours a week of ... 40 or 50 hours this week of live training for our brokerage, didn't change at all. It just happened the way it normally would because it's all in the cloud. So that's been nice and I think, my hope is that some of this kind of trickles over into other industries and other companies and they start to realize that you actually can operate that way here in the year 2020.
Dean: Yeah, that's awesome. Well, I've been excited to talk to you. A lot of times I don't ... On these podcasts, I don't ... The first time I'm talking to somebody is when we're on the phone like this but you and I have had some interactions and I know a little bit about what you're about so I've got a nice context for us. But let's kind of set the stage here for people so we can get them up to date on the Kevin story and then where we're going to focus our time, what you want to focus on.
Kevin: Cool, so I'll just give it my best shot and you tell me when I'm rambling too much.
Dean: Yeah, okay, no problem.
Kevin: Like you said, my name's Kevin. I've got a business partner. We co-own a real estate sales team called Group 46:10 and we're based here in Tempe, Arizona as you know, your buddy Joe is my neighbor.
Dean: Mm-hmm (affirmative).
Kevin: We operate here in the Phoenix area. We have now for 12 years, but we also operate our sales business in a few other cities across a couple other states, namely, San Luis Obispo, California; Denver, Colorado; Dallas, Texas; and then Nashville, Tennessee is where also operate as well and have some of our sales team members. We're just a residential real estate, like people ask me all the time, "What do you guys specialize in?" We specialize in helping people buy and sell homes, just kind of regular people. We help, obviously, the mom and pop investors, we work with some of the bigger disruptors out there like Opendoor, et cetera, as well, just because they're a part of our market and have been for so long now.
That's what we do, we sell real estate. There was a time I built my business, I got licensed in '07, - started working together in LA and we built our business around short sales, so if we were doing this interview 10 years ago, like I would have only had short sale listings and we never did REO. We just did short sales, we were extremely good at it, it's how we built our business and then we just kind of propelled that into I guess a more traditional real estate business and then in 2014 is when we decided we were going to expand and go outside of our home territory of Phoenix. That was when we opened our first location there in Denver and then the following year, we went into Nashville and here we are in 2020. We've taken quite a bit of a beating and had a couple of wins along the way and I've been punched in the nose a few times and we're still going and fighting and selling real estate in Phoenix and it's a heck of a lot of fun.
Outside of that, I like to do a lot of what you do from a standpoint of giving back to the real estate community. I feel like I've learned so much from people that came before me, that I do spend a lot of my time giving back, whether that's through our Facebook group, which kind of just works as a free online mastermind or through my podcast or through teaching in person or teaching virtually. Whatever that looks like, I really like to help other real estate agents as well.
Dean: That's awesome and how many agents do you have on your team?
Kevin: So we're right at about 40 agents right now, between all of the cities that we cover.
Dean: That's awesome, good for you. Very exciting. Where do you think would be the best place for us focus here? What are we hoping to expand on or accomplish here?
Kevin: I feel like because it's so topical, not necessarily Corona virus but I think the reality is now, coming into this all today I've got a different, I guess, viewpoint or set of thoughts on my mind than I did probably two weeks ago or a month ago, when we set the call up. You know what I'm thinking about is how do we provide value to ... What do we do for our customers? What do we do when people are scared? I think we've got a unique opportunity to not look like sharks, if you will, like going, "Hey, how do I make this a business opportunity," but really provides value that's actually in turn would probably help our business six months from now, 90 days from now and what I want to do is be able to get out there and help the agents on our team figure out, "Hey, here's how we do that." I think that's one thing on my mind.
The other piece of it is perhaps this is the beginning of a change. Maybe this isn't a blip with the financial markets and what's going on. Obviously, it's far more than a blip, but this is the beginning of a recession, if I could use the R word, or the beginning of things starting to change, then, hey, what do we do from a positional standpoint to make sure we're shifting along with the market.
Dean: Yeah, we were laughing the other day. I did our Gold College call with our members and we were talking about the toilet paper and hand sanitizer shortages of what a great lead magnet for a open house now. It's "Free toilet paper, come by our open house to see us," or "Free hand sanitizer for popping by," kind of thing. That's a fun, probably get some leverage out of that, as a fun, very timely type of thing.
Kevin: Absolutely.
Dean: But part of on the real front of that, you started, you said in '07 and I remember very distinctly when in 2008, when of course, the Stock Market took that big dive and then everything kind of started cascading down and all through, real estate prices started dropping and it was a real panic. But there was an underlying directly related cause to it, in that there was this run up in 2004, '05, '06, '07, of unchecked zero down, negative am, easy financing ... The sub prime mortgages, all of that that had to kind of ... It was festering underneath. This is something that is and more of an acute onset, unrelated thing that is causing all of this, because inherently the real estate markets, almost everywhere are very strong.
I mean you can't call what the market we've been going through as slowing or struggling or anything like that. So you have to wonder what's the sort of acute onset cause of variation is addressed then we should be able to see things stabilize. But if they don't the thing that really we have to go with is realizing that there's opportunity in every market no matter what the condition is. Just like what you ended up getting into the business to do is helping people with short sales. One of the things that we did to help people shift in that time was creating a program, our Finding Buyers program, centered around bank owned homes, and we created a program called Bank Owned Weekly, where people could advertise a weekly inventory list of the bank owned homes in the area, and then a weekly newsletter about it.
That was like an amazing thing because in 2009, that was at the heyday of Craigslist advertising, where you could run HTML adds on Craigslist and link people out to your website where they could bin and you're building your list then Craigslist kind of shut that down. And I think that the lesson of this is that you've got to be adaptable, right? You've got to observe what's going on and then be adaptable to respond to what's happening with some innovation or going in the direction of doing the best thing that's available at the time. Like right now, there's not a lot of short sale, let's see, would be thriving kind of as a short sale specialist right now, right?
Kevin: Right.
Dean: But you adapted and if that ever does come back, you now, you've figured out something. You've got a playbook for upside down ... Do you think you can dust off the things that you were doing then and immediately deploy them, couple with all the learning that you've had? Given the time ... The decline of it.
Kevin: Oh, yeah, with no doubt. In fact, obviously, I never for the sake of people and especially friends and family, et cetera, I don't ever want to see a market like that again, but strategically, I'd love to see a market like that again. Our business would absolutely boom. I often think if I only knew then about the real estate business what I know now ...
Dean: Right.
Kevin: With I knew then about short sales, I mean, then I just knew how to do that thing but now I actually know how to run a business around it. So it's significantly, that would be a huge advantage to us at this point.
Dean: Yeah, and coupling that with realizing that at the time, Craigslist was a great tool, then it got ... It was almost too good is what happened and then they started taking away the loopholes that kind of allowed of that to work. But then along came Facebook advertising and we've had an amazing run with Facebook advertising being able to do whatever we want, right? And now Facebook had just made it more restrictive or difficult to do all the things that we had figured out in terms of micro targeting and all the specific things, but now you've got to adapt to the new reality that you can run 15 mile radius ads and how do you make that work? You know, always have to be able to innovate and adapt to whatever is happening.
Kevin: Yeah, that's a really good point and I think that the other thing that I think is regardless whether we're talking about kind of the strategy, like a short fail or REO bank owned or how do we advertise Craigslist on Facebook. There's always a way to do something, right, it's just a matter of how do we deploy that. What is that vehicle after Facebook, after short sales, after REOs, whatever that looks like? Yes.
Dean: So what do you see as the things that are kind of working the best for you right now in terms of if we look at our Listing Agent Lifestyle Elements? We talk about getting listings and multiplying your listings and getting referrals and converting leads and finding buyers, which ones do you think are ones that you've got firing the best right now and which ones are maybe the ones with the biggest opportunity?
Kevin: I feel like getting listings are always going to be the biggest opportunity and I know it is for us right now. Something that we did about not quite a year ago, it was last summer is I did what I called declared bankruptcy on my sphere of influence. It wasn't too long after I interviewed you for my podcast and I just, I'm just going to start over and I opened up the address book on my phone. I opened up my Facebook account. I opened up my CRM account and I just started writing names on a blank spread sheet, and a business partner. I just said, "Hey, who are the people that if I saw them in the grocery store, they'd stop and say hi. If I called them, they'd take my call and I would take their call and actually care."
I just started with that group of people and you know the first thing I did was I went directly to World's Most Interesting Postcard. I'm holding one right now and I'm not saying that because I'm on the phone with you and it's a plug. That was literally my first step, as I said, "Hey, here's what I know," because I'm off building the brokerage as well and I've got a few other things that we do and another business outside of real estate that I put some time into and so I said, "One thing is I've been in the business for too long not to have consistent 150, 200 yields a year in Phoenix, here that come just from our past clients and our sphere of influence."
And so what are some of the things I can do with ... I guess, to steal your terminology, with the use of an easy button that would allow me to make sure my referrals stay up and things like that. I went with kind of clearing it out and rather than just trimming down what I had I just started from scratch and immediately put those people on a post card and then it went to a twice a month video update, if you will, on different topics as well as ...
Dean: Nice.
Kevin: And one other automated piece of email, it's a pretty cool software, that allows people to view their home as an asset and look at it as an asset, versus just seeing the value of it. I said, "Cool, here's four touches now monthly I can do." I literally spend, between filming videos and putting text onto the World's Most Interesting Postcard, et cetera, I might spend an hour a month or less to be able to touch these people automatically, consistently, effectively. And that's paid off for us already, even though, we've only done that now for a relatively short period of time. That's paid off.
Dean: Yeah.
Kevin: I think what I'm looking to next is how do I go ... This is a Dan Kennedy process of like, I want to go back to the mailbox with some direct offers. There's a lot of technologies out there, as you've probably seen that are at least trying to calculate and make assumptions on whose most likely to sell or whose most likely to need to move based on algorithms and if we can maybe leverage some of that on top of leveraging the people we know with some really great direct mail offers, then on top of our digital strategy, we should be good. And so I think that's really where I'm focused out on this point.
Dean: Yeah, so I look at there's the, think, I'm going two directions here. First of all, I'll finish up on the referral side of what you were talking about and then we will go into the getting listings side, because I've got some thoughts about the mail and those algorithms. So remind me about the algorithms, because I really want have a discussion about that.
Kevin: Okay.
Dean: But what I look at now is the opportunity that you have and that everybody has is in this referral side to really measure and keep your eye on that return on relationship number, that if you look at it, that you said that there's big opportunity with people who already know you, like trust you. That there are some amount of your business that's coming is from people that already are doing business with you, that they already know you, they already like you. Are you doing, by the way, personal production, too, or are you just run, everything's going through the team?
Kevin: Everything goes through the team. I'm not doing any personal production. I've got one particular agent of our team who's been with us now, I've known her for 20 years. She's been with us for seven, so like my family members are ... Anything I would have handled personally, she does for me.
Dean: Okay.
Kevin: So I'm not actually transacting, but I am absolutely cultivating the relationship.
Dean: You're contributing, right, exactly.
Kevin: Yeah.
Dean: One of the great things that is a big opportunity to move the needle is creating a culture of referral, and a culture of return on relationship, and among each other. When you've got 40 agents, the real interesting thing to look at is to individually and collectively, measure the return on relationship that you get from each of the members' top 150. So if you create a culture that, how many team members are in Phoenix versus Denver, versus national, or the others ... Let's just say, isolate the Phoenix team, for instance?
Kevin: We've got 15 in Phoenix.
Dean: 15 in Phoenix, okay. So if we take that and we look at the 15 times 150 is ... What is that? 15 times 150, 22, 15 times 150 ...
Kevin: 42 ...
Dean: 2250.
Kevin: Okay.
Dean: So if we look at this, the gold standard for what we're looking for from your relationship portfolio there is that we should be able to manage that for a 20% annual yield. So that would mean that if we're looking at that group, 22, 150, times 20%, we should, fire in all cylinders, be able to generate 450 transactions from that group of 2250 people.
Kevin: Wow.
Dean: Now if we looked at it, let's just set that that's the bar here, what would be the average or median commission that comes in per transaction for where you are, the dollar amount?
Kevin: I recall about $8,000.
Dean: Okay, time $8,000 is $3.6 million is what that should be able to yield. Okay, now if we take that and look at what's happening right now with collectively that existing top 150 times 15 is ... How many transactions did the team do in the last 12 months that were from ... After - , from repeat and referral?
Kevin: I set that to, without looking in the system, it's probably closer to 150 from that.
Dean: Okay, okay, so if you think about the 150 out of 2250 is 6.6%. Okay, so what we're looking at is that right now the current system, the way that you are managing this relationship portfolio, because each of the people on the team has a 150 relationships. So each one of those, the way that you're managing that is for a 6.6% return on relationship, right? And so that is yielding a 150 times 8,000 is $1.2 million, so the $3.6 million minus $1.2 million is $2.4 million, and so if we take this approach of working backwards, from how high is high, meaning what's possible, what could we be doing?
I know that that's possible because within our Go, Go Agent Community, we've got lots of people that are managing their relationship portfolio for a 20 plus percent annual yield, right? And at scale, I mean, in big amounts there. So if we look at that, that what's happening is that not maximizing that, not focusing on that, that your losing $2.4 million a year by not optimizing the return on relationship of your after unit.
Kevin: Good point, yeah, wow.
Dean: Yeah, so when you start to look at that and you say, "Part of these things that I draw people's attention to are to imagine that this is a division of your operation," right? Like let's imagine if you dedicated one person who's whole responsibility they are the return on relationship czar among your team and their whole responsibility is to oversee and orchestrate the management of those relationships, managing it for closer to that 20% annual yield would be a pretty amazing outcome. Like so much potential in that.
Kevin: Gee whiz.
Dean: Now part of the same, the way that you can create a culture of that, especially among a team is to create a culture that cooperatively makes it easy to focus on it as an individual and as a team, right? Because everybody's top 150 is different, the top 150 relationships that you have are different than Sally's, they're different than John's, they're different than Nancy's, right? So collectively, everybody's got a 150 different people in this pool of 2250 people.
Now when you take each individual on there, if they were to measure their individual return on relationship, with their personal top 150, some people are going to be doing better than others, right?
Kevin: For sure.
Dean: But presenting that as a known amount, like having it as a trackable leaderboard or a key metric that you're performing at, right? That if you have a minimum standard among the team of 10%, let's say that if you set that as a minimum standard, even difference between 6% and 10% is probably $800,000 or more, right?
Kevin: Gosh, that's a huge difference.
Dean: Yeah.
Kevin: Even with even just a relatively small improvement.
Dean: Yeah, and so you think about that as like how can you do that. Certainly each individual being aware of it, unless you probably present that to people, the whole thing is really about awareness, but they may not even think that number, right? And this is one of the beauty of having a key metric. I call them Proprietary Metrics, where this is a secret sauce metric that you're looking at that most people don't look at, that when you look at it, it's working. It's there, whether you're paying attention to it or not. Like this is historical, you know you've got all of the data and you could right now, look at the top 150 for each of the 15 people in your relationship or in your team there and look at how much repeat and referral business they did in the last 12 months and measure it against 150.
150 is the standard number we use, because that's the number that it's been proven that that's the number of relationships we can manage. Right, there's something Robin Dunbar, he's a evolutionary psychologist in Oxford, that came up with that number. It's actually called Dunbar's number, and when they do looking at normal people on Facebook ... I say normal people, not entrepreneurs or people like us, who are trying to artificially pad up our friend group, that the average number of friends that people have on Facebook is a 153. So it's really interesting that that's what we're talking about. Most people don't have 5,000 friends.
Kevin: Yeah, that's a good point.
Dean: Yeah, so anyway, when you look at that, if you were to go and just say, just looking back at all of the transactions that you guys did and you estimate that probably a 150 came from that, that there may be some people who are doing better than others? Right, among the team, that you may have some people who've got a 2% return on relationship and you have some people who got a 12% return on relationship, but that's their thing, that they're just work with people.
That that, having those things set up so that your ... The collective is to help people manage their individual top 150s for a 20% annual yield, but then there's an opportunity that you have that the World's Most Interesting Postcard is the baseline of all of it. It's the set it and forget thing that at the very least you're in front of somebody 12 times a year, they've got your contact information right there. They see your face, you've made a contact, but you're also very specifically programming them for referrals.
Kevin: Right.
Dean: Right, because every ... That's the whole purpose of it is to realize that all the referrals are going to come as a result of conversations, and that all we want to do is raise the odds that they notice the conversation is about real estate. That they think of you, and they introduce you to the person they had the conversation with. So when we look at it, that's going to set the baseline but one of the most impactful things that we teach people to do is to do an activity every week that we call Market Maker Monday.
And what Market Maker Monday is is the idea for you to look at your calendar Monday morning. You come in, you look at your calendar and you see who am I showing houses to this week? Like who have I got in the car going to look at homes this week. You're setting up the appointments. You know where they're going to go, and then look at your calendar and say, "Who am I going to physically meet with about listing their house this week? And those opportunities now are unique chances for you to orchestrate referrals. One of the things that we do and this would be an amazing asset for you is to create a Google Map layer with your top 150 dropped as a pin in your marketplace.
So you can look at a map and see where physically, each of your top 150 are and let's say that you're showing houses in River Run Townhouse Complex, and you have an appointment with somebody living here from Tucson. They're looking in River Run and you look at your map and you see that there are 250 town homes in this complex and that you have a client who lives in River Run. Now it would be a high probability that they may be involved in conversations with their neighbors in River Run, right? Where do we have conversations?
We have conversations with people that we're proximity to, but what if your client is Kim and she's a stay at home mom and they've got two kids and she's constantly out on the playground with the other moms who live in there and who are stay at home moms, and they just on the playground got the news that Nancy and John are having another kid and they're going to need to sell their house the townhouse to get a bigger house for the kid. Now if you are able to send an email to your client Kim and say, "Hey, Kim, I'm showing houses this week in River Run, and there's only a couple for sale in there. Have you heard anybody talking about selling? We may be able to match them up with this couple from Tucson?"
Just a short personal, expecting a reply email like that, with a very specific orchestration. There's a total reason for sending that, a very specific thing, right? That you're specifically talking about the River Run and this situation that you're dealing with. There's if she had had that conversation, how is that going to make Kim look to the other moms if she emails you back and say, "Oh, my God, I was just talking with Nancy. They're having another baby and they need to sell their house, let me connect you with her," and you're able to sell that townhouse, because of that connection, Nancy or you client Kim is going to look like a hero, and you're going to look like, "Wow, that's amazing."
Everybody's going to be so appreciative. Your clients from Tucson are going to be impressed because you got them accessed to something that wasn't even available.
Kevin: Yeah, that's powerful when you start to do that, especially to, as you were saying, doing that in big numbers and going-
Dean: Imagine doing that 50 times? I just had my Go, Go Agent Academy here in Orlando a couple of weeks ago. We had a guy from Wisconsin, Ron Reid, who has been a guest on the podcast now, but he really embraces Market Maker idea and he reported that it worked out to be an extra $50,000 for him by doing, proactively thinking that every time he's got a client.
Kevin: Wow.
Dean: Right, so you think about that and you do that multiplied by 15 people, and it's a pretty amazing thing. Now the other thing that you have the opportunity for collectively is if you have a team and you can create a culture of market making ... We just in Go, Go Agent created a landing page called Our Market Maker O-matic landing page, where it's a form that you can email to everybody on your team on Monday morning and say, "Welcome to Market Maker Monday, fill out this form by 11:00 AM today whoever you're working with, whoever you're going to see about selling a house."
Now you have to have really strict integrity rules on putting somebody on that form, it literally has to be, "I'm showing houses on Thursday to this person and here's where we're looking." Because you can't have just, "Oh, I've got somebody for a three bedroom," or "I've got someone for this," like you're looking for prospects kind of thing that you're going to use that to go stimulate somebody. To be on that list, it's got to be something real, so that if it wasn't you that was showing townhouses in River Run, but let's say it was Steven, on your team, who told you that, "I'm showing townhouses in River Run," and you look at your map and you see that same scenario that we just described.
So now you're able to send that message to Kim and say, "Hey, Kim, a colleague in my office just asked me if I knew anybody in River Run. They're showing houses this week and I knew that you lived in there. Have you heard anybody talking about selling?" So the same effect but you get access to Eve's opportunity, right? That you would not otherwise have known about.
Kevin: Yeah, and, gosh, I mean that opens up ...
Dean: If you think about what a multiplier that could be.
Kevin: That is a big multiplier, yeah. Those are really big.
Dean: Yeah, especially collectively as a team, that's a big thing. It's a network effect that multiplies it because now if you're doing it individually, you get 50 opportunities to do it and maybe not every week, you're showing houses to somebody or going to see somebody about a listing, but as mail, you get not only your opportunities but you also get the stimulus or opportunity of everybody else's opportunities.
Kevin: Yeah, it's almost like we could stare stuff this up, like we could take ... and we've got ours. We've got a few other people that are doing the 150's defined, they're actually getting the postcards as well now. And now we can go to take those other three people, move them into this, and then add on someone and add on someone. There's a lot of power in that.
Dean: Yeah, yeah, it's pretty wild, right, what could happen, and you're talking about something that would be, you know, that doesn't cost anything to do. And the reason I was saying that you send out the email to the team, with a link to the form, everybody fills out the form. It's collated into one document that's like Market Maker Hot Sheet that then is distributed to everybody at 1:00, but 1:00 on Monday, everybody gets the, "Here's this week's Market Maker Opportunity Sheet."
Kevin: Interesting. I like that idea.
Dean: Yeah, that may be one of the biggest ideas I've ever had as far as like direct impact on people with zero conflict, really. Like the challenge of often trying to collectively help a group of agent to somebody who feels like they're getting some advantage over everybody but this is truly the network effect is the more people that participate, the more opportunity it creates.
Kevin: Yeah, that's insane. Okay, I like that. You said, just because I wrote it down, you said, "Don't forget, remind you to come back to the direct mail and the algorithm conversation as well."
Dean: Yes, I want to make sure we hit that before we wrap today. Okay, so the other thing about the algorithms is when you pick an area, I'm always like let's just not buy and stock pick. Most of the algorithm people are day traders. That's what they're trying to do, right? They're trying to maximize right now who's the people who are most likely to see right now, like the good leads, right? But what I'm talking about is let's take the Warren Buffet approach. Let's talk about dominating a neighborhood for all of it. Like, let's take River Run as an example, that if you take River Run, 250, not unusual for a townhouse complex to have a 10% turnover rate, and so there's 25 people that are going to sell their house each year in River Run, right? So that total yield out of there might be 25 times 8,000. What might that be? I can't do the math here.
Kevin: $200,000, yeah, right.
Dean: $200,000, that's the total yield from that, right? That when you look at it, those 25 that are going to sell, there may be some that the algorithm would say are going to sell, but what you can't algorithm for is the somebody's getting divorced or somebody lost their job or somebody got a promotion, somebody had another baby. Those things that are wildcards in all of this, why not just focus on the ones who are interested in knowing what are the house prices in River Run, because that's what we're doing. That's the most valuable postcard that we have is sending out, not the trying to convince people to list their house with me, but just the ones that get the people who are going to sell their house to raise their hand. So that's really the most valuable.
Kevin: That's really for lack of a better word, like that's the old school, we all say farming approach.
Dean: Well, it is but there's slight differences, right? So when you're talking about the old school farming approach would be just be in front of people, right, get your name out there. Top of mind awareness so, just personal promotion, get out there and you're the name they know, right? But that's a very different thing than being completely focused on the mechanics of what's actually going to happy, so we look at it, that what would be the genesis thought of somebody thinking about selling their house? What's the first thing that they're going to want to know?
Kevin: Probably what can I get for it.
Dean: What can I get for it? That's going to drive the context of everything, right? So in order for that to be true, then we start to look at, that's why people will often send out, find out how much your house is worth for free, right, online, and they put your address in here and then that triggers this whole, the bulldog approach, right? Three phone calls, you've got to call them in five minutes. You've got to call them twice, and hang up. Then call them from another number and leave a voice mail and then call them in the afternoon and text them and send them an email and do that for 10 days in a row. You know, Speed to Lead, all those kind of things where you get somebody to try to pounce on them as soon as they get any kind of interest, right?
Well another approach to that is to realize that people who are going to sell their house aren't doing it impulsively. Nobody wakes up all of a sudden and says, "That's it. We're selling the house. Call the realtor. Get the for sale sign." That's not the way it goes, right? So what we do is offer people the ... and it's a subtle difference, but it's profound. We offer people the March 2020 Report on River Run Townhouse Prices, which now is not shining the spotlight on them. It's not making them ask for a subjective opinion on what your house is worth but it's offering them a compiled report of market data that they can voyeur on in on. The report's already done, and people trust market data more than subjective opinion data.
Kevin: It makes sense.
Dean: So if I'm thinking that you know I'm in line, let's think about Mark and Kim living in River Run. They're thinking, "Okay, we're going to try and have another baby. We've already got two and we've got two bedrooms, we're going to definitely need a bigger place if we do get pregnant, but we're going to start trying now." And anybody rationally going into something like that, is going to think, "Okay, how much is it going to cost us to get this new ... Like we should probably start getting our ducks in a row here, and so in order to figure out any kind of calculation of what this is going to impact, they're going to want to know two sides of the equation.
How much is the house we're going to move to and how much can we get for ours? So they're going to start gathering data. Right, that this, "Oh, this is going to be useful for me."
Dean: Now they're going to do that months before they put their house on the market and now this is your algorithm. Your algorithm is that the people who ask right now for the report on River Run townhouse prices are going to be more likely to sell their house in the next 12 months, 24 months than the general population. Because if you are thinking about and there's a piece of data, do people feel more like they would rather have less information or more information?
Kevin: For sure more.
Dean: Yeah, anybody who sees this message, who is thinking about it at some point, would feel like, "Oh, I should get that," and now what you're building is this pool of people who are below the surface, who are thinking about selling at some point, right? They're emerging sellers, and so I would rather have that than an algorithm that sort of predicts, because they live in a house for the small ... or that they're ... I'd rather know that they with their own volition chose to ask for this report.
Kevin: Right, yeah, that makes a lot of sense. You're building your own analytics.
Dean: Now you drop a pin, yes, now you drop a pin and that amplifies your Market Maker opportunities. If you've been doing Getting Listings Program in River Run, and you've had out of the 250, you've had 25 people, who've raised their hands and responded to your postcards and you dropped the pin on the Google Map to show them where they are. Now when you're showing houses in River Run, you can look at your Google Map and you've got these people who've responded and you can say to them, "Hey, John, I'm showing houses this week in River Run and I've got a couple from Tucson who are looking for a two bedroom. I remember looking up your townhouse when I sent you the River Run Report a couple of months ago. I'm not sure what your plans are but I thought I'd check in and see if maybe I can tell them to bug your house." That's how being the Market Maker has a big impact on your Getting Listings Program.
Kevin: That makes a big impact.
Dean: Yes, it's pretty huge.
Kevin: That it is. I like it.
Dean: What do you have to say about all that?
Kevin: I feel like I've got some work to do.
Dean: Yeah, we've literally talked about one and a half things. One and a quarter things, right?
Kevin: Yeah, true, true. Gosh, it was good.
Dean: So what's your takeaway? What do you think your action items will be from this?
Kevin: I think my number one action item here is start to go back, like one thing personal, I'm a one thing at a time guy, I'm not that smart so I have to stay focused, but to go back and start to scale up the relationships, the other people who in our world, who have a 150 relationships and start to help them tap into those, their return on relationship. For everyone like you said, we've probably got some 12 or 13, and a lot of people are 1% or 2%, but let's get everybody up to 10% first and then work towards 20% and adding in more people to then do that.
Dean: If you imagine, just the trickle down of that, where now, your minimum standard is 10% and you go in a recruiting type of situation, when people are saying, "Well, why should we come with you?" Well, here's one reason, you're going to make more money by getting more repeat and referral business and here's how and you calculate what their return on relationship is and just by plugging them into your system, that's going to raise it up. It's going to be a dramatic improvement for them.
Kevin: Yeah, it would be and, by gosh, like you said, too, it's for me, we continue to - about the trickle effect of everyone else in the building and all the other stuff that doesn't come from that. It could be really big.
Dean: Yes, agreed. Well, this has been fun.
Kevin: Yes.
Dean: I love talking with you. You're a big thinker.
Kevin: Thank you. I appreciate this, Dean. I appreciate you ...
Dean: But more importantly than being a big thinker, you are a big doer and I don't want it to seem like, "Wow, you guys, you're missing out on so much stuff," but that you are a doer and you've got so much going for you. I know that you're going to take this and run with it and I can't wait to see how it all unfolds.
Kevin: Well, appreciate that. I'll keep you posted on this and give you and update soon and we'll take it from there. I'll probably be back looking for help with the next step. I'm certain of it.
Dean: Absolutely. Okay, man, will talk to you soon.
Kevin: Hey, man, have a great one. Talk to you later.
Dean: Thanks. Okay.
Kevin: Bye-bye.
Dean: And there we have it, another great episode and if you'd like to continue the conversation, you can go to ListingAgentLifestyle.com. You can download a copy of the Listing Agent Lifestyle book, the manifesto that shares everything that we're talking about here and you can be a guest on the show if you'd like to talk about how we can build a Listing Agent Lifestyle plan for your business. Just click on the Be a Guest link at ListingAgentLifestyle.com and if you'd like to join our community of people who are applying all of the things we talk about in the Listing Agent Lifestyle, come on over to GoGoAgent.com, it's where we've got all the programs, all the tools, everything you need to get listings, to multiply your listings, to get referrals, convert leads, and to find buyers, and you can get a free, truly free, no credit card required trial for 30 days at GoGoAgent.com. So come on over and I will see you there.